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  • Driving Gen Z
    • 09/06/18
    • Automotive
    • Consumer Life
    • Global
    • English

    Driving Gen Z

    Turn back the clock a handful of years and you’ll find automotive strategists bearish that Millennials’ lack of interest in vehicle ownership will usher in the slow, but inevitable, decline of the car industry. Yet, today, 29% of new vehicles are already being bought by Millennials. In just a few years, despite accounting for only a quarter of the population, our largest generation at 80 million will account for 40% of new car sales. And they’ll just be entering their prime earning years at that point.

    Naturally, Millennials will be the sales focal point for quite some time. However, manufacturers are already looking towards the next generation of American drivers. Known as Post-Millennial or Gen Z, they’re roughly 8 to 20 years old today and expected to be 75+ million strong. With the vast majority still in school or living at home, innovation for tomorrow begins with insights unearthed today.

    GfK Consumer Life has been tracking the emergence of this young generation for some time, and we’ve identified several themes that will yield challenges, but also opportunities, for manufacturers.

    Ambitious, yet pragmatic

    As previously outlined, the post-Millennial generation is as focused on accomplishment, if not more, than on self-discovery. Financial independence is their primary goal today. In fact, 80% want to stay away from debt completely, according to research from GfK Consumer Life. And as they watched Millennials before them struggle with mounting college debt, 54% have already taken jobs to earn money for college, while 85% plan to work during their college years.

    Arguably the strongest advantage today’s teens have compared to Millennials is a robust economy. In retrospect, the timing of the Great Recession (along with historically high gas prices in 2008) as Millennials transitioned to adulthood had the most profound impact on their attitudes towards vehicle ownership. With unemployment reaching an 18-year low earlier this year, upcoming graduates may find a more lucrative job market, and access to transportation more affordable. In fact, after a short dip during the recession, Americans are now driving more miles with more vehicles than ever before. While it’s impossible to predict the next recession, manufacturers and retailers should expect the next generation to transition more seamlessly (and perhaps earlier) into adulthood. They may be shopping your brand sooner, rather than later – if, of course, the product is right.

    Seamless mobility

    You won’t just be selling cars to this generation, you’ll provide them access to fully integrated mobile platforms that eliminate the gap between in- and out-of-car experiences. Today, it’s connected car features – from smartphone integration to streaming services to mobile wifi. Yet, smart devices are second nature to them (1 in 3 are already using mobile voice command), and GfK Consumer Life has found that they’re already 50% more likely than the average American to be controlling smart home or smart car devices and features from their phone. Manufacturers will need to work hard and fast to integrate vehicles into their internet of Things. Whether it’s warming up the oven or conducting mobile video conferences on the drive home from work, or ordering food or vacation planning while in transit (as GM recently introduced with its mobile Marketplace), this generation will demand the absolute elimination of transit “dead time.”

    Multi-mobile

    Of course, ‘buying’ may not be their prerogative. The fiscal savvy of this age group will place greater emphasis on building a flexible transportation portfolio, which may include any number of public, shared, or owned vehicles and services. According to GfK Consumer Life’s most recent 2018 data, teens are just as likely to use public transportation as Millennials (20%), yet less than half as likely (15% vs. 27%) to have used car sharing services. However, on the latter, they are already well ahead of Gen X (11%) and the Boomers (4%) before them. Not surprising, manufacturers are moving aggressively on this front. Subscription models from luxury brands are being tested regionally. Yet, with significant pricing premiums attached to such programs, viability beyond the most affluent is still in question. Gen Z may provide the scale to take these programs mainstream. In fact, they’re already catching up to Millennials on interest in vehicle subscription services (39% vs. 41%), and ahead on shared ownership (32% vs. 28%), despite being novice drivers.

    Security first

    Growing up in the aftermath of 9/11, countless school shootings (active shooter drills are now commonplace in our K-12 schools), and too-many-to-count data privacy breaches, manufacturers can expect this generation to take a more cautionary, yet demanding approach to personal safety and security. According to GfK MRI’s American Teen Study, they are more likely to rate safety in an accident higher relative to fun to drive, compared to Millennials as teens in 2011. Today, 42% view proactive safety systems as important, while 46% are also seeking features that protect from environmental hazards. In fact, according to GfK’s Automotive Innovation and Technology Study, Gen Z are almost three times as likely as average respondents to be seeking wellness solutions that go beyond active and passive safety systems.

    Beyond physical safety, auto manufacturers might find it more challenging to access and leverage Gen Z’s digital footprint compared to Millennials before them. These teens are sharing less personal information online, with only 31% keeping social pages updated (vs. 45% in 2009). Only 44% are willing to share personal data, even in exchange for benefits and rewards (compared to 62% of Millennials). According to GfK MRI, they are also more than twice as likely as Millennials to embrace the privacy of Snapchat (75% vs 37%), reinforcing their need for secure channels.

    As the first post-digital generation, they have also identified the limitations of social media and are re-investing in personal interactions. In fact, 3 of 4 are choosing smaller groups of friends over large groups of acquaintances, while a study from IBM suggests that Gen Z is placing as much importance on offline socializing as online. This social recalibration will be an invitation for brands to develop trusted one-to-one relationships with their next generation of clients. Leveraging the convenience of mobile technology, manufacturers such as Lincoln are adding concierge services for a decidedly personal touch to the entire life of the ownership experience. While these are generally reserved for premium brands and consumers today, such offline approaches may well suit the next young buyers seeking a brand connection – one that’s equally digital and analog.

    The road ahead

    While Millennials are center stage for now, the next consumer wave is right around the corner. As it stands, the future looks bright for Gen Z, and especially for those manufacturers who have begun to shine a light on them.

  • Will the CMA league table of banks’ quality of service drive people to switch?
    • 09/03/18
    • Financial Services
    • Global
    • English

    Will the CMA league table of banks’ quality of service drive people to switch?

    Banks and building societies in the UK now have to display material in their branches and websites that shows a national ‘league table’ of banks’ quality of service. This is part of a Competition & Markets Authority (CMA) and Financial Conduct Authority (FCA) drive to create competition in the banking sector by encouraging switching.

    The question is, what affect will it have?

    We know from change behaviour models, such as Fogg, that, for behavioural change to happen, a person must have sufficient motivation, sufficient ability, and an effective trigger. All three factors must be present at the same instant for the behaviour to occur.

     

    Right now, people have the ‘ability’ to switch, provided by the Current Account Switch Service (CASS), which the CMA introduced to make switching much easier and therefore help overcome apathy.  The ‘trigger’ may well be provided by this new CMA ‘quality league table’, as people can easily see whether their account provider is better or worse than others. But that still leaves ‘motivation’.

    Will consumers be motivated to switch simply by believing that they will get higher quality of service elsewhere? Or will they need something more concrete, to give them sufficient motivation to switch?

    What motivates people to switch current accounts?

    At present, 5%1 of current account holders state that they are considering switching current accounts in the next 12 months, rising to 20%1 amongst those who are actively dissatisfied with their existing provider.

    Dissatisfaction with one’s existing account provider is clearly a strong negative motivator for switching. However, in the last 12 months, only 3.5%1 of current accounts actually did switch.

     

    This imbalance is no doubt partially due to the perceived hassle of switching accounts, despite services such as CASS.

    However, an additional barrier may be that people did not have a clear view of which bank could give them a better service – so they lacked a positive motivator. The CMA’s new league table of service quality will certainly go some way to bridging that gap – given that all banks and building societies providing personal current accounts now have to display the “top five” brands for four categories: Overall service quality; Online and mobile banking services; Overdraft services; and Services in branch.

    Other motivators that we know are already driving switching include product incentives. A good example of this is Santander’s 1|2|3 account, which offers cashback on household bills and a good interest rate on the account balance. Since its launch in 2012, Santander’s market share has risen by 2.6 percentage points1.

    Although very gradual, our FRS data also shows signs of customers moving away from the “Big 5” banking groups to embrace a wider range of challengers – driven by brand innovation, as well as product incentives.

    What does this all mean for banks?

    For the “Big 5” banks, the focus is likely to be on retention – ensuring they innovate to inspire and hold onto their customers.

    Key areas for retention include winning the mobile banking battle (a major area, as ‘convenience’ continues to grow in importance in people’s daily requirements), making branches relevant, so that they become attractors and combat challenger online and offline offerings, and ensuring their CMA ‘quality league table’ scores are strong, relative to others.

    For Challengers, such as Metro Bank, looking to acquire customers from the Big 5, the focus is likely to be on driving communications that emphasise “it’s easy to switch to us, we offer stellar customer experience and our proposition delivers the benefits you are seeking”.

    Conclusion on switching

    While the CMA service quality league table is unlikely to prompt a flood of switching on its own, it certainly adds an extra stepping-stone for those people considering switching.

    Brands who are in the top five on the CMA league table will be making the most of this independent ranking, to advertise their performance to both existing and potential customers – and working hard to ensure they retain their place.

    This means that brands not in the ‘top five’ on the CMA league table may be more vulnerable to customers considering switching to other brands who are flagged for their service excellence.

    The way to combat this is to ensure they have timely and accurate information on their full customer harmonics and experiences and understand where to innovate to improve this, to ensure their customers are not motivated to switch.

    Contact us: We can help you understand your customers’ current experiences, and identify areas of innovation to both retain and acquire customers

    <h5>Footnote:</h5>

    1GfK Financial Research Survey (FRS) data to March 2018. GfK’s industry-leading Financial Research Survey (FRS) is the definitive study for UK retail financial services. Established in 1977, our research builds a complete picture of the UK financial consumer. Annually we interview 60,000 respondents, understanding consumer’s financial holdings, acquisitions, usage, and behaviour. It is a key single source of data, providing insight into consumer financial behaviour.

     

     

  • E-commerce continues to gain ground in technical consumer goods markets
    • 08/30/18
    • Retail
    • Global
    • English

    E-commerce continues to gain ground in technical consumer goods markets

    GfK findings for the global technical consumer goods retail markets for IFA 2018 in Berlin

  • Need for performance drives global PC market
    • 08/29/18
    • Technology
    • Point of Sales Tracking
    • Global
    • English

    Need for performance drives global PC market

    GfK findings for the global PC market to be released at IFA 2018 in Berlin.

  • Global smartphone market goes large for premium priced devices
    • 08/29/18
    • Technology
    • Point of Sales Tracking
    • Global
    • English

    Global smartphone market goes large for premium priced devices

    GfK findings for the global telecom market to be released at IFA 2018 in Berlin.  

  • High-end TVs dragging the market upwards
    • 08/29/18
    • Technology
    • Point of Sales Tracking
    • Global
    • English

    High-end TVs dragging the market upwards

    GfK's findings for the global TV market to be released at IFA 2018 in Berlin.

  • Audio devices become smarter and sound better
    • 08/29/18
    • Press
    • Media and Entertainment
    • Global
    • English

    Audio devices become smarter and sound better

    Findings for the global audio market to be released at IFA 2018 in Berlin.

  • German consumer climate declines slightly once again
    • 08/29/18
    • Retail
    • Global
    • English

    German consumer climate declines slightly once again

    Findings of the GfK Consumer Climate Study for August 2018

  • Developing economies: impactful, fluctuating and maturing
    • 08/28/18
    • Technology
    • Global
    • English

    Developing economies: impactful, fluctuating and maturing

    While to have a strong presence in the developed markets is very important to any global brand, the weight of developing economies continues to be impactful internationally. Developing Asia including India plus the Chinese market weigh in with about 41% of all smartphone purchases in the first half of 2018.

    Telecom represented the fastest growing product group in China and India

    With 12% revenue CAGR over this period, Telecom represented the fastest growing product group in China and India. In case of major domestic appliances in the first half of 2018, it is the recoveries in Russia (+11 percent) and in LATAM (+9 percent) that are particularly exceptional. Also APAC stayed on a growth track contributing 66 percent of the total growth. With regards to the TVs, LATAM fueled the global growth heavily. Those countries contributed in the first half of 2018 with a sales value growth of 25 percent towards the global turnover increase in the TV market.

    These market growth opportunities do not come without a risk though. In the TV market, for example, LATAM sales unit growth fluctuated between +19 percent year on year in 2014 and -28 percent in 2015, to be up again at +35 percent in the first half of 2018. In case of CIS region, the drop in 2015 in the TV product category was even -47 percent in 2015 to be up at +15 percent in 1H2018.

    Developing economies are reaching higher levels of market penetration of mobile phone subscriptions that creates new market dynamics altogether across all our panel market product categories. Designing and retailing technology and durable goods for these markets is increasingly becoming more about finding the right replacement and upgrade proposition rather than identifying offering for the first time ownership.

    Developing economies are maturing

    Hand in hand with governments’ focus on sustainable reforms that is linked to economic development and resulting in growing disposable income and growing middle class population, developing economies are maturing. While connecting the unconnected continues, migrating customers to data plans, replacements, upgrades, move to premium priced devices and creating suite of additional services generates pockets of growth that are shifting to where the money is.

     

    This blog has been written by the Strategic Insights team.

     

    To gain actionable insight into the trends driving innovation across the tech industry, take a look at our resources section.

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  • Ongoing disruption: the growing dominance of online retail
    • 08/28/18
    • Technology
    • Global
    • English

    Ongoing disruption: the growing dominance of online retail

    Customers are increasingly asking for omni-channel shopping. Our FutureBuy study indicates an increasing preference of online retail and mobile shopping around the globe. Respondents increasingly agree with statements such as “I really need the shops and services I use to be available at all times” that went up by 4 percent between 2016 and 2018.

    China is setting the pace for online retail

    For technical consumer goods in the first six months of 2018, in Western Europe, the value share of online sales has grown to now 25.3 percent. This is plus of 8.2 percent compared to 1.3 percent growth of the total market. Globally, China is setting the pace for online retail. Being the largest online sales market, another significant increase of more than 20 percent is accomplished. Driving forces in China are the Telecom and Major Domestic Appliances markets – and more potential can be foreseen for the future.

    Traditional season peaks lose relevance with online promotions

    Another serious impact of online retail are shifts in the seasonality of sales. Online retail tries to differentiate through their own promotions and those are easily scalable and hence turnover intensive in a digital environment. Consequently, traditional season peaks like Christmas season lose relevance with online promotions like Cyber week, Singles Day/Double Eleven or 618 (JD.com). While online retail sales are growing up, assortments do the same.

    More growth potential is explored by online retail going mobile. Share of respondents agreeing with “My mobile device is quickly becoming my most important shopping tool” has increased from 34% in 2015 to 45% in 2017 in our FutureBuy study. Convenient shopping online, even on social media or wherever consumers see goods they may want to have – yet another level of easy shopping. In APAC, already 29% of all MDA purchases were done via a mobile device in 2017 (up from 25% in 2016) while in Europe is behind with only 12% in 2017 (also up from 9% in 2016) here, Notebooks still account for the biggest part of purchases (43%).

     

    This blog has been written by the Strategic Insights team.

     

    For more insight on the most important trends driving innovation across the tech industry, visit our insights section.

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  • Only the best will do: the growing appetite for premium features
    • 08/28/18
    • Technology
    • Global
    • English

    Only the best will do: the growing appetite for premium features

    With increasing wealth around the globe and a growing target group which is enabled to buy premium products, value becomes a more and more important driver. Consumers’ preference for “owning fewer but higher quality items” came strongly across in our latest Consumer Life study. Especially in developed and saturated markets, value growth is the main opportunity for retailers and industry together.

    Consumers are upgrading their devices

    At the forefront of this development smartphones reveal this trend. While many markets already reached a certain saturation and global units sales are not growing, the value development is still promising. Consumers are upgrading their devices and flagship models are well in demand.

    Also for TVs, premium features such as 50+inch sizes and OLED turn a negative volume market into a value growth market. Further prominent examples are audio devices equipped with Dolby Atmos or DTS-X sound technology as well as high performance headphones and headsets above 150 Euro selling price.

    Multifunctional appliances with premium price are strong in demand

    Willingness to invest in the place to live is reflected by the growth of value segments in household appliances. Multifunctional appliances with premium price (for example washdryer, hobs with integrated hoods or combi-steam ovens) are strong in demand and spark value growth. Also lifestyle plays a role, especially for small domestic appliances, when consumers are willing to spend more than 300 Euros for a rechargeable handstick vacuum cleaner or a robot.

    While demand for desktop computers or notebooks is still under pressure, also here the increasing sales of gaming PCs results in elevated prices and growing premium segments. But also non-gaming PCs/notebooks pick up in selling price and drive the market value again.

    Overall, it becomes evident that this overarching premium trend originates in consumers choosing for value segments offering more performance, convenience, quality or similar. While this drives prices up as a mix effect, like-for-like products usually are still experiencing price pressure. Consequently, permanent innovations justify the premium price which consumers are willing to pay in 2018.

     

    This blog has been written by the Strategic Insights team.

     

    Check out our further insights to get the important information on the top trends driving innovation.

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  • Performance matters: discerning consumers favour high-end features
    • 08/28/18
    • Technology
    • Global
    • English

    Performance matters: discerning consumers favour high-end features

    With customers becoming increasingly conscious about the performance of their devices, a trend towards high-end feature specifications is observable in smartphones, consumer electronics devices, home appliances and IT equipment.

    Why performance matters?

    On the consumer side, the expectation for rich experiences on their devices is growing. Share of respondents who strongly agree with “I value experiences more than possessions.” in the latest Consumer Life study increased to 45%. Processing-hungry applications are emerging and put pressure on the performance capabilities of the devices. These capabilities are becoming crucial for the seamless usage of the applications.

    HDR & OLED are on the rise

    4K resolution, bigger and better screens, superior front and rear cameras are a few of the key characteristics for a mobile device. 50”+ TV sets stood for 50% of the sales value in the first half of 2018 and grew significantly. The main technological advancements here are HDR & OLED, which are currently on the rise. The PC markets follow a similar trend to high performance, which is reflected, among others, in the growing value share of performance processors, 8+ GB RAM, solid state drives and full HD displays.

    Within in major domestic appliances big is beautiful. Capacity is the key-word that drives all major markets. This translates into increasingly larger loading capacities in washing machines, taller and wider refrigerators, as well as more spacious oven cavities.

    Consumers perceive high performance products as a long-term investment with a long lifecycle, which does not outdate too quickly. The buyers associate these devices with superior experiences and higher quality.

    Manufacturers are constantly on the rush

    On the industry side, manufacturers are constantly on the rush for the ‘next big thing’ and operate in a fierce competitive environment. High-performing products demonstrate their ability to innovate and generate more awareness for the brand. In times of decreasing margins, high-end products can act as turnover stabilizer, especially in volatile markets.

     

    This blog has been written by the Strategic Insights team.

     

    You can learn more about the trends driving innovation, check out our other insights.

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